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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
During the past 8 years, the highest Beneish M-Score of Verisk Analytics Inc was -2.34. The lowest was -2.79. And the median was -2.43.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of Verisk Analytics Inc for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 1.2715||+||0.528 * 1.0341||+||0.404 * 0.986||+||0.892 * 1.0946||+||0.115 * 1.1363|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9069||+||4.679 * -0.0382||-||0.327 * 1.1742|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $221 Mil.|
Revenue was 464.864 + 448.665 + 423.554 + 409.643 = $1,747 Mil.
Gross Profit was 271.282 + 267.792 + 251.084 + 239.97 = $1,030 Mil.
Total Current Assets was $384 Mil.
Total Assets was $2,345 Mil.
Property, Plant and Equipment(Net PPE) was $302 Mil.
Depreciation, Depletion and Amortization(DDA) was $143 Mil.
Selling, General & Admin. Expense(SGA) was $227 Mil.
Total Current Liabilities was $771 Mil.
Long-Term Debt was $1,101 Mil.
Net Income was 97.37 + 99.015 + 88.099 + 115.558 = $400 Mil.
Non Operating Income was 0 + 0 + 0.126 + 0.009 = $0 Mil.
Cash Flow from Operations was 110.817 + 91.8 + 54.007 + 232.828 = $489 Mil.
|Accounts Receivable was $159 Mil.
Revenue was 416.723 + 411.927 + 390.356 + 376.697 = $1,596 Mil.
Gross Profit was 246.567 + 255.621 + 237.927 + 233.065 = $973 Mil.
Total Current Assets was $475 Mil.
Total Assets was $2,504 Mil.
Property, Plant and Equipment(Net PPE) was $233 Mil.
Depreciation, Depletion and Amortization(DDA) was $135 Mil.
Selling, General & Admin. Expense(SGA) was $229 Mil.
Total Current Liabilities was $431 Mil.
Long-Term Debt was $1,271 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(220.668 / 1746.726)||/||(158.547 / 1595.703)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(267.792 / 1595.703)||/||(271.282 / 1746.726)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (384.483 + 302.273) / 2345.33)||/||(1 - (474.845 + 233.373) / 2504.451)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(134.578 / (134.578 + 233.373))||/||(143.483 / (143.483 + 302.273))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(227.306 / 1746.726)||/||(228.982 / 1595.703)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((1100.874 + 771.27) / 2345.33)||/||((1271.439 + 431.179) / 2504.451)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(400.042 - 0.135||-||489.452)||/||2345.33|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
Verisk Analytics Inc has a M-score of -2.34 suggests that the company will not be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
Verisk Analytics Inc Annual Data
Verisk Analytics Inc Quarterly Data